Should I buy a fixer-upper?
Before you leap, you should weigh the various factors in such a purchase.
For one thing, renovating a house takes money. You’ll need a ready supply of cash for materials and labor. You can save money by doing the work yourself, but remember that if the quality of the work is substandard or not up to code, future buyers won’t care how much love you put into the labor.
If you can’t come up with all the needed cash, you can sometimes renovate in two or three stages, and refinance between the stages. Refinancing can be expensive, so make sure that each stage substantially improves the value of the property. Otherwise, the refinancing won’t be worthwhile.
You should also keep in mind that renovating creates chaos. If you cannot sleep in a house with constant disorder and unending layers of dust, a fix-up home may not be for you.
Renovation can also strain a relationship. It may mean weeks or months of late-night and weekend teamwork between a couple, with lots of sweat and crabbiness while the plumbing is disconnected. You may suddenly discover the outer limits of your love over a sawhorse in the living room.
On the other hand, if you are skilled with your hands, you can find a lot of satisfaction in creating a beautifully restored home. Rather than wait for property values to increase gradually, you can realize a major increase in your equity in a relatively short period of time.